Mogo Engaged in an Attempt to Gain Control of WonderFi Without Paying a Premium to Shareholders
WonderFi Reaffirms Commitment to Value Creation for All Shareholders Through Strong Continued Performance
Toronto, Ontario--(Newsfile Corp. - March 28, 2024) - WonderFi Technologies Inc. (TSX: WNDR) (OTCQB: WONDF) (the "Company" or "WonderFi"), Canada's leading operator of regulated crypto trading platforms and other digital asset businesses, today acknowledged a press release statement from a WonderFi shareholder, Adam Arviv of KAOS Capital Ltd. ("KAOS"), that it intends to nominate five individuals to stand for election to the WonderFi Board of Directors (the "Board") at the Company's 2024 annual meeting (the "Annual Meeting").
KAOS also announced that it had entered into a voting agreement with Mogo Inc. ("Mogo") where (i) Mogo would support the KAOS nominees for election to the Board, and (ii) KAOS would support the election of an individual nominated by Mogo, pursuant to Mogo's rights under its investor rights agreement ("IRA") with WonderFi.
WonderFi's Board is committed to acting in the best interests of the Company and all of its stakeholders and regularly engages with shareholders as part of the Company's efforts to drive sustainable long-term value. The coordinated action between KAOS Capital and Mogo comes as no surprise to the Board. It appears to be part of a years-long attempt by Mogo to gain control of WonderFi (and its predecessor, Coinsquare) without paying its fellow shareholders a premium.
Mogo's ownership comes from WonderFi's acquisition of Coinsquare, where they were a non-controlling shareholder. As of yesterday, Mogo's total market capitalization was roughly equivalent to the total cash, digital assets, and investments held on WonderFi's balance sheet, and Mogo's total market capitalization is less than one-third of WonderFi's total market capitalization.
Mogo introduced KAOS to WonderFi to further its longstanding goal of gaining control without paying a premium
KAOS was introduced to WonderFi by Michael Wekerle. Mr. Wekerle had several meetings with Mr. Arviv, but he has explicitly refused to disclose exactly what he discussed with Mr. Arviv or how Mogo was involved in those discussions. These are critical issues, because Mogo's IRA includes a standstill provision, which prevents it (or anyone acting jointly and in concert with it) from acquiring, making any take-over bid, or tender offer of WonderFi shares.
KAOS' involvement with the Company began with an informal proposal for an equity financing that the Company was not interested in pursuing. WonderFi, with its strong balance sheet supported by a successful business, is fully funded and declined the idea of an equity financing.
Over the past months, members of the Board and management team have engaged patiently with KAOS, who appears to be a relatively new and minor shareholder of WonderFi, having now disclosed ownership of less than 1% of WonderFi's stock.
The KAOS proposal focused almost exclusively on appointing Brian Shroder, a former senior executive of Binance.US, a subsidiary of the global cryptocurrency exchange which plead guilty to federal charges in the United States and agreed to pay over US$4B in penalties[1], to the Board or as a member of management. KAOS' proposal revealed a fundamental misunderstanding of WonderFi's business. WonderFi operates regulated crypto trading platforms, and maintaining credibility with the regulators, stakeholders, and its 1.6 million clients will always remain our top priority.
The Company received an additional proposal from KAOS through discussions with Mr. Wekerle, that inexplicably contemplated additional board representation for Mogo. Through these and other interactions, members of the Board believed that Mogo was attempting to further its efforts to gain control of WonderFi, potentially in direct violation of its contractual obligations to the Company. Mogo's actions led to the Board's decision to form a Special Committee that is solely dedicated to addressing the ongoing issues created by Mogo and has been tasked with commencing an investigation to better understand these activities.
WonderFi is working to investigate and understand the history of Mogo's proposal, and whether Mogo and/or KAOS have breached their legal obligations. Mogo's representative on the WonderFi Board, Mr. Wekerle, has refused to co-operate with that investigation. WonderFi's investigation will continue despite this refusal, and WonderFi is ready, willing and able to enforce all of its legal rights.
It is important to note for shareholders, that notwithstanding any representations to the contrary, KAOS, with the support of Mogo, has approximately 14% of WonderFi's shares committed to vote for its unnamed nominees, according to a securities filing made by Mogo.
WonderFi is focused on continuing to deliver results for shareholders
Over the past year, WonderFi's Board and management team delivered on the transformational merger of WonderFi, Coinsquare and CoinSmart that closed in 2023. This successful combination resulted in WonderFi emerging as one of the largest regulated crypto-asset trading platforms in North America. The Board and management team has been focused on driving the integration of these businesses and benefits of the merger, which are now showing significant returns. Following the merger, WonderFi has reduced costs by 60% and substantially improved the Company's financial position.
Under the leadership of WonderFi's CEO Dean Skurka, WonderFi has consolidated and integrated client accounts and associated trading volumes and revenues from five of the eleven regulated crypto trading platforms in Canada, elevating WonderFi into Canada's largest ecosystem for digital assets with over 1.6 million clients. WonderFi's total client assets on the combined platforms have surpassed $1.5 billion, representing an increase of almost 50% since December 31, 2023.
As WonderFi reported earlier today, the Company continues to drive strong financial and operational performance, delivering Q4 2023 revenue of $12.9 million at the high end of its guidance range, an increase of 30% compared with Q3 2023. WonderFi also achieved positive EBITDA of $6.7 million in Q4 2023 months ahead of internal projections, a significant increase compared with negative $7.5 million in Q3 2023.
WonderFi's management team believes that the strength and quality of WonderFi's financial and operational performance will improve the visibility of the Company with new and existing investors. The Company will continue its efforts to broaden investor awareness and understanding of the unique value proposition that WonderFi can offer investors.
The Company has demonstrated that WonderFi's businesses have strong leverage to the increase in the price of Bitcoin and the acceleration in cryptocurrency trading volumes - translating into significant daily trading revenue.
WonderFi's wholly owned trading platforms processed over $2.5 billion in trading volumes in 2023, with SmartPay processing $625 million in payments volume during the same period. The Company had total cash, digital assets, and investments of over $57.3 million as of December 31, 2023.
The Special Committee will review and consider the nominations with its professional advisors. WonderFi will respond appropriately in due course. At this time, there is no need for shareholders to take any action in respect of the Annual Meeting.
Advisors The Special Committee has retained Goodmans LLP as its independent legal advisor. The Company has retained Morrow Sodali (Canada) Ltd. as its shareholder services advisor, and Gagnier Communications LLC as its strategic communications advisor.
About WonderFi WonderFi owns and operates Bitbuy and Coinsquare, two leading domestic crypto platforms with strongholds in the Canadian market as well as through SmartPay, its global crypto payments platform.
With a collective user base of over 1.6 million registered Canadians and a combined assets under custody exceeding $1.5 billion, WonderFi serves one of the largest crypto investor communities in Canada.
Media Riyaz Lalani & Dan Gagnier Gagnier Communications (416) 305-1459 [email protected]
Forward-Looking Information and Statements
This press release contains certain "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the beliefs of WonderFi Technologies Inc. ("WonderFi" or the "Company") regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such "could", "intend", "expect", "believe", "will", "projected", "planned", "estimated", "soon", "potential", "anticipate" or variations of such words.
Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.
The Toronto Stock Exchange has not approved or disapproved of the information contained in this release. Except as may be required by applicable law, WonderFi disclaims any obligation to update or revise any forward-looking statements.
